I see no ethical standard by which to measure the whole unethical conception of a State, except in the amount of time, of thought, of money, of effort and of obedience, which a society extorts from its every member. Its value and its civilization are in inverse ratio to that extortion. — Ayn Rand

While libertarians all agree on the need for a drastic reduction in the size and power of the state, the libertarian movement has long been divided between the anarchists, who believe that the state should be done away with entirely, and the minarchists, who wish to reduce it to a few functions regarded as essential. This dispute also goes on within the Free Nation Foundation, whose membership (including the Board of Directors itself) is split on the issue of anarchism (also known as anarcho-capitalism, or market anarchism) vs. minarchism (also known as limited government). I welcome Adrian Hinton’s contribution as an opportunity to advance this discussion. [1]

What is Objective Law?

For Hinton, the chief defect of anarchism is its incompatibility (as he sees it) with objective law. Unfortunately, Hinton does not define the notion of objective law, but he gives us a few clues. He contrasts objective law with a system in which “anything goes;” in which individuals or groups can act in accordance with rules they simply happen to take a fancy to, unconstrained by the need to give rational justification.

I gather, then, that objective law is reliable and principled. Under a system of objective law, legal requirements will not simply arise or vanish with the whims of particular legislators or the shifting fortunes of pressure groups. There is some predictability to the law, with regard both to content and to enforcement; one can count on it. And the reason for this is that the requirements of objective law are grounded on reasons that are accessible and justifiable to rational human minds generally, regardless of personal emotional biases and idiosyncrasies.

If this is what objective law is, then I agree that objective law is a good thing. But is it true that objective law can be provided only by a governmental monopoly?

Objective Law Requires Competition

Consider the parallel case of objective science. Objectivity is a good thing in the sciences too; but how do we achieve it? We do not suppose that the way to get objective science is to put all scientific research into the hands of a single governmental monopoly; on the contrary, we recognize that it is only through allowing competition among scientific theories and scientific research programs that scientific objectivity is possible. As John Stuart Mill argued in On Liberty, we learn the worth of our ideas by seeing how well they can withstand challenge, whether in the form of intellectual arguments or in the form of alternative experiments in action. A view that is insulated from critique is less well grounded, since we cannot tell whether it would have survived had critique been permitted. Nothing would be more deadly to scientific objectivity than monopoly control.

And as Austrian economists Ludwig von Mises and Friedrich A. Hayek have shown, this argument applies to the market for goods and services just as much as to the market for ideas; competition is a discovery procedure, a crucial source of information, but one whose data grow steadily less reliable as it falls under the direction and control of a centralized state. If this is true for ideas, goods, and services, why not for law as well?

Law Without the State

Hinton says that “anarchy would certainly mean in practice … to have no government.” If by “government” Hinton means the state, i.e., an agency holding a monopoly (or near-monopoly; no institution has ever held a genuine monopoly) on the use of force within a given territory, then it is trivially true that anarchism means having no government. Anarchy just is the absence of a government.

But Hinton’s phrasing — saying that the absence of government is what anarchism would mean “in practice” — leads me to suspect that he regards the absence of government as a result of anarchy rather than the same thing under another name. This suspicion is confirmed by his use of Ayn Rand’s phrase “competing governments” (a phrase rarely used by anarchists themselves) to describe the anarchist system; obviously by “competing governments” Hinton cannot mean competing states. My guess, then, is that by “government” Hinton means something like: an institution or set of institutions governing human activity through the application of rules. In short, by government he means something rather like law.

But does Hinton really mean to maintain that there would be no law, no legal system, in the absence of a centralized state (i.e., a territorial monopoly)? That would be a remarkable claim, for the overwhelming preponderance of historical and anthropological evidence verifies that law is far older than the state. Until recently, states were the exception, not the norm, in human society; and stateless societies have enjoyed quite sophisticated and long-lasting legal codes.

Of course, the fact that stateless legal systems exist does not show that they are particularly good. Admittedly, none of these stateless legal systems represents the libertarian ideal. Neither, however, does any state known to history. Which is better?

It might be thought that a monopoly system is better if only in virtue of being more reliable and predictable. If a single agency is charged with legislating and enforcing the rules of conduct in a given area, one can expect those rules to be reasonably uniform; whereas if many different agencies are producing law, one has little to count on.

But the historical record suggests otherwise. For example, the Law Merchant — the stateless system of commercial law that evolved during the late Middle Ages and early Renaissance — was able to compete successfully with government courts precisely because it offered a more reliable and uniform system than could its state competitors. The reason is not difficult to find: a competitive, voluntarily funded system needs to please its customers, while a government monopoly, which forbids competition and extracts its revenues by force, faces no such incentive. (To offer a contemporary analogy: the reason no company offers triangular credit cards is not because card shape is regulated by the government but because customers would not purchase a card that would not fit in standard ATM machines. Standardization emerges because of market pressure, not at the barrel of a governmental gun.)

Hinton maintains that under anarchism, every individual “would have to either carry a gun at all times, or else join a private militia composed of such people. In other words, America would look rather like the Wild West.” To begin with, this might not be so bad; contrary to the Hollywood stereotype of lawlessness and violent shootouts, the reality of life on the frontier, today’s historians are discovering, was relatively peaceful and civilized — certainly a good deal more so than America today. An anarchist society could do worse than to imitate the so-called “Wild” West.

Leaving that aside, however, why should we assume that the options Hinton describes are the only ones? If shoes are not provided by a centralized governmental agency, we do not infer that everyone will either have to become his own cobbler or else join a shoe-manufacturing commune. Instead, we foresee a division of labor: some people will specialize in the making of shoes, which other people will purchase from them. Why not expect a similar development in the market for law?

Perhaps Hinton is assuming that an anarchist society could not afford a division of labor in the production of law, because the application of law typically requires the use of physical force, and if only some members of society are specializing in the use of physical force, then everyone else in society will be at their mercy. But if this is an objection to anarchy, why is it not a still stronger objection to the state, since the state, unlike a security agency under anarchy, is unchecked by any rivals and so is in an even better position to abuse its power?

Is Limited Government a Genuine Alternative?

Hinton envisions a minarchist utopia in which governmental actions are “rigidly defined, delimited, and circumscribed,” while the government itself is “like an impersonal robot,” operating free from any “touch of whim and caprice.” This sounds nice, but after all, the state is an institution with a definite nature, and the actions to be expected from it are determined by that nature and not by our wishes and fantasies. So the real question is whether it is realistic to expect this kind of automatic and impartial operation from a centralized monopoly.

But surely the verdict of public-choice economics is in the negative. The state is a human institution, peopled by individuals who respond to incentives. And, as Madison and Hamilton pointed out in The Federalist, in our choice of political institutions we cannot afford to assume that those we place in charge can be counted on to be wise and just. Power corrupts, because it attracts the corruptible. And the incentive system of a governmental monopoly is truly perverse. Imagine a state official who controls a million dollars in tax money. How is he motivated to spend it? In a competitive market he would be motivated to spend it in such a way as to please his customers (in this case, the taxpayers), but as things stand they have nowhere else to go. (If he is an elected official, perhaps they will have a chance to vote against him in a few years, but the franchise, with its all-or-nothing character, is a rather less effective mechanism for the expression of preferences than the market.) But if he is offered favors or bribes by special-interest groups, then he has an incentive to divert that money to their favored cause; after all, it isn’t his money, so he has nothing to lose.

Hinton may well reply that such problems are to be solved by a constitutional structure incorporating checks and balances. I agree. But I see anarchism as the logical conclusion of the checks-and-balances approach. The point of checks and balances is to put a brake on the tendency of political institutions to aggrandize power by arranging it so that a power grab by one part of the system will trigger opposition by other parts of the system. This was the idea behind the U. S. Constitution, with its federalism and division of powers. Unfortunately, it failed, as the supposedly antagonistic parts learned the benefits of working together to oppress the people. From an anarchist perspective, the problem with the minarchist version of checks and balances is that it does not go far enough; the opposing parts are too few in number, and too closely linked together in a single overarching institution.

I once opposed anarchism precisely because I was so convinced (largely as a result of reading Isabel Paterson’s The God of the Machine) of the importance of constitutional structure. I assumed (as Paterson had) that there is no constitutional structure under anarchy. But it now seems to me that precisely the opposite is true: the competitive market provides a much more sophisticated and complex constitutional structure than any state monopoly.

Hinton worries that, in an anarchist system, private courts “could freely dispense with such niceties as procedure or rules of evidence.” So they could. So could government courts (as indeed they often do). So long as humans possess free will, nothing can guarantee that they will act as they should. The fundamental question is this: under which system — market competition or government monopoly — is abuse of power more likely?

But the problem is not one of evil motivations alone. Even a state run by saints would face an informational problem. Just as the most well-intentioned central planner would be unable to make objective decisions about economic production, consumption, and distribution, because the information generated by the spontaneous market order would be inaccessible to him, so without the competitive, evolutionary process through which law originated and developed before the state, a centralized legislature would be unable to make objective decisions about which legal rules and procedures work best.

Resistance is Feudal

The history of Europe offers an instructive example. At the beginning of the Dark Ages, the Roman Empire had collapsed in the West, while still surviving in the East in the form of the Byzantine Empire. For the next thousand years, Europe was divided between these two regions. An observer at the start of this period might well have predicted that the East, not the West, would be the most successful. After all, the East had retained much of the classical learning that had been lost in the West; moreover, the institution of Roman law had been maintained in the East, while the West had become politically fragmented and decentralized. But this is precisely why the next step forward in civilization was taken by the West and not by the East. In the East, the state grew steadily more powerful, more centralized, more bureaucratic, and more oppressive. No rivals to its authority were permitted; even the Church was absorbed into it. Inefficient, stagnant, ossified, the Byzantine Empire became a brittle structure unable to withstand the steady advance of Turkish migrations. Even the classical heritage of Greco-Roman thought did the East no good, when the Emperor successfully issued an edict closing the schools of philosophy.

In the West, by contrast, there was no political monopoly. Power was divided among kings, nobles, free communes, and the Church. An adverse decision in the manorial court could be appealed to the royal court, or the merchant court, or the ecclesiastical court, and so on. (For details, see Harold Berman’s Law and Revolution.) Competition created the trial-and-error process through which common-law systems evolve and progress and adapt to the needs of the time. And it is because of the spaces of freedom that were opened up through this decentralized, competitive system that trade and culture began to flourish again in the West. (By contrast, in the East, Roman law — which originally had contained competitive, evolutionary elements, as Bruno Leoni shows in Freedom and the Law — became codified and static.)

Anarchy and Gang Warfare

Hinton offers two scenarios as a challenge to the defender of market anarchism. In the first scenario, Smith asks his security agency A to impose legal sanctions on Jones for an alleged robbery, and Jones asks his security agency B to protect him. Mustn’t such a situation inevitably lead to violent conflict between security agencies?

Perhaps, but it seems unlikely. Security agencies are not governments with a guaranteed supply of tax revenues. They depend on their customers, and so are much more responsive to customer demands. War is an expensive means of settling disputes, and even the most belligerent customer may think twice on receiving his monthly bill. Security agencies that settle their disputes by force rather than through arbitration will have to charge higher premiums, and so will lose customers to their competitors.

Does this guarantee that a system of competitive security agencies will never break down into warfare? No, nothing can guarantee that. All I am making is a comparative claim: competitive security agencies are far less likely than monopoly governments to resort to force.

Hinton’s second scenario concerns a demonstration by a Communist punk-rock militia, armed with submachine guns and singing the Internationale (that old punk-rock standard). Hinton asks what response, if any, the anarchist would regard as legitimate.

The first thing the anarchist would want to know is who owns the street where the demonstration is taking place. If the demonstrators have not obtained permission to be there, the owners would be within their rights to call in a security agency to eject the trespassers.

But perhaps the demonstration is taking place on public property. (I regard public property as a legitimate concept, though many market anarchists do not.) At that point, the question is whether the demonstrators are violating anyone’s rights. Certainly there can be no libertarian objection to their exercise of the right to bear arms, a right endorsed by minarchists and anarchists alike. The question is whether the demonstrators are threatening aggression. If so, it is legitimate to call in security forces to restrain them — and again, this is so both on anarchist and on minarchist premises. The anarchist position is not that “the Commie punks should have the freedom to do whatever they feel like.” Rather, anarchists hold that the Commie punks should have the freedom to do whatever they feel like so as long as they do not initiate force — whereas the minarchists wish to restrict not merely the use of initiatory force, but the use of defensive and rectificatory force as well. I do not see how this additional restriction can be morally justified. And in practical terms, granting one agency the right to use forms of defensive and rectificatory force denied to everyone else is extremely dangerous.

To those interested in a more detailed defense of market anarchism, or in an examination of historical examples of successful stateless legal systems, I recommend starting with the following works: David Friedman’s The Machinery of Freedom; Bruce Benson’sThe Enterprise of Law; Friedrich Hayek’s Law, Legislation, and Liberty (particularly Volume One); Randy Barnett’s The Structure of Liberty; William Wooldridge’s Uncle Sam, the Monopoly Man; Murray Rothbard’s For a New Liberty; and John Sanders and Jan Narveson’s For and Against the State.